Tesla (TSLA) To Start Production in China Next Year

Tesla is expected to begin partial production at its first factory in China in the second half of 2019, the Shanghai government said after a meeting with local Tesla executives.

“At present, the project has basically completed land leveling and is about to start construction. It is expected to be partially put into operation in the second half of next year,” a statement from the Shanghai government said, as reported by Electrek on Thursday.

The China factory, to be built in Shanghai, will be Tesla’s first production facility outside the United States. The electric vehicle (EV) maker signed the deal for the construction project with the Shanghai authorities in July. The factory is expected to double Tesla’s electric car production, beginning in two years.

The peak annual turnout of the Shanghai factory will be half a million Teslas and the same amount of battery packs, to be achieved two to three years after the launch of production, Tesla said in July after the signing of the deal with Shanghai authorities. This will put it basically on par with Tesla’s original factory in Fremont, California.

Early in August, reports had it that Tesla started hiring personnel for its gigafactory in China, looking to hire 14 people, all in senior managerial and operating positions.

Tesla has started a tender process for the construction of the gigafactory in Shanghai and at least one contractor has begun buying materials for the construction, Reuters reported on Thursday, citing sources and documents it has reviewed.

Tesla aims to have a production facility in the world’s top EV market China in order to be able to compete on a level playing field with a growing number of local EV manufacturers. As a U.S.-made vehicle, Tesla’s cars in China are subject to steep tariffs, which China additionally raised during the U.S.-China tit-for-tat tariff spat this year.

Tesla Inc. shares were trading at $364.15 per share on Thursday afternoon, up $4.45 (+1.24%). Year-to-date, TSLA has gained 16.96%, versus a 1.32% rise in the benchmark S&P 500 index during the same period.